Tex. Bus. & Com. Code Section 9.407
Restrictions on Creation or Enforcement of Security Interest in Leasehold Interest or in Lessor’s Residual Interest

(a)

Except as otherwise provided in Subsection (b), a term in a lease agreement is ineffective to the extent that it:

(1)

prohibits, restricts, or requires the consent of a party to the lease to the assignment or transfer of, or the creation, attachment, perfection, or enforcement of a security interest in, an interest of a party under the lease contract or in the lessor’s residual interest in the goods; or

(2)

provides that the assignment or transfer or the creation, attachment, perfection, or enforcement of the security interest may give rise to a default, breach, right of recoupment, claim, defense, termination, right of termination, or remedy under the lease.

(b)

Except as otherwise provided in Section 2A.303 (Alienability of Party’s Interest Under Lease Contract or of Lessor’s Residual Interest in Goods; Delegation of Performance; Transfer of Rights)(g), a term described in Subsection (a)(2) is effective to the extent that there is:

(1)

a transfer by the lessee of the lessee’s right of possession or use of the goods in violation of the term; or

(2)

a delegation of a material performance of either party to the lease contract in violation of the term.

(c)

The creation, attachment, perfection, or enforcement of a security interest in the lessor’s interest under the lease contract or the lessor’s residual interest in the goods is not a transfer that materially impairs the lessee’s prospect of obtaining return performance or materially changes the duty of or materially increases the burden or risk imposed on the lessee within the purview of Section 2A.303 (Alienability of Party’s Interest Under Lease Contract or of Lessor’s Residual Interest in Goods; Delegation of Performance; Transfer of Rights)(d) unless, and then only to the extent that, enforcement actually results in a delegation of material performance of the lessor.
Amended by Acts 1999, 76th Leg., ch. 414, Sec. 1.01, eff. July 1, 2001; Acts 2001, 77th Leg., ch. 705, Sec. 12, eff. June 13, 2001.

Source: Section 9.407 — Restrictions on Creation or Enforcement of Security Interest in Leasehold Interest or in Lessor's Residual Interest, https://statutes.­capitol.­texas.­gov/Docs/BC/htm/BC.­9.­htm#9.­407 (accessed Jun. 5, 2024).

9.101
Short Title 9.102
Definitions and Index of Definitions 9.103
Purchase-money Security Interest 9.104
Control of Deposit Account 9.105
Control of Electronic Chattel Paper 9.106
Control of Investment Property 9.107
Control of Letter-of-credit Right 9.108
Sufficiency of Description 9.109
Scope 9.201
General Effectiveness of Security Agreement 9.202
Title to Collateral Immaterial 9.203
Attachment and Enforceability of Security Interest 9.204
After-acquired Property 9.205
Use or Disposition of Collateral Permissible 9.206
Security Interest Arising in Purchase or Delivery of Financial Asset 9.207
Rights and Duties of Secured Party Having Possession or Control of Collateral 9.208
Additional Duties of Secured Party Having Control of Collateral 9.209
Duties of Secured Party if Account Debtor Has Been Notified of Assignment 9.210
Request for Accounting 9.301
Law Governing Perfection and Priority of Security Interests 9.302
Law Governing Perfection and Priority of Agricultural Liens 9.303
Law Governing Perfection and Priority of Security Interests in Goods Covered by a Certificate of Title 9.304
Law Governing Perfection and Priority of Security Interests in Deposit Accounts 9.305
Law Governing Perfection and Priority of Security Interests in Investment Property 9.306
Law Governing Perfection and Priority of Security Interests in Letter-of-credit Rights 9.307
Location of Debtor 9.308
When Security Interest or Agricultural Lien Is Perfected 9.309
Security Interest Perfected Upon Attachment 9.310
When Filing Required to Perfect Security Interest or Agricultural Lien 9.311
Perfection of Security Interests in Property Subject to Certain Statutes, Regulations, and Treaties 9.312
Perfection of Security Interests in Chattel Paper, Deposit Accounts, Documents, and Goods Covered by Documents, Instruments, Investment Property, Virtual Currencies, Letter-of-credit Rights, and Money 9.313
When Possession by or Delivery to Secured Party Perfects Security Interest Without Filing 9.314
Perfection by Control 9.315
Secured Party’s Rights on Disposition of Collateral and in Proceeds 9.316
Effect of Change in Governing Law 9.317
Interests that Take Priority over or Take Free of Security Interest or Agricultural Lien 9.318
No Interest Retained in Right to Payment that Is Sold 9.319
Rights and Title of Consignee with Respect to Creditors and Purchasers 9.320
Buyers of Goods 9.321
Licensee of General Intangible and Lessee of Goods in Ordinary Course of Business 9.322
Priorities Among Conflicting Security Interests in and Agricultural Liens on Same Collateral 9.323
Future Advances 9.324
Priority of Purchase-money Security Interests 9.325
Priority of Security Interests in Transferred Collateral 9.326
Priority of Security Interests Created by New Debtor 9.327
Priority of Security Interests in Deposit Account 9.328
Priority of Security Interests in Investment Property 9.329
Priority of Security Interests in Letter-of-credit Right 9.330
Priority of Purchaser of Chattel Paper or Instrument 9.332
Transfer of Money 9.333
Priority of Certain Liens Arising by Operation of Law 9.334
Priority of Security Interests in Fixtures and Crops 9.335
Accessions 9.336
Commingled Goods 9.337
Priority of Security Interests in Goods Covered by Certificate of Title 9.338
Priority of Security Interest or Agricultural Lien Perfected by Filed Financing Statement Providing Certain Incorrect Information 9.339
Priority Subject to Subordination 9.340
Effectiveness of Right of Recoupment or Set-off Against Deposit Account 9.341
Bank’s Rights and Duties with Respect to Deposit Account 9.342
Bank’s Right to Refuse to Enter into or Disclose Existence of Control Agreement 9.401
Alienability of Debtor’s Rights 9.402
Secured Party Not Obligated on Contract of Debtor or in Tort 9.403
Agreement Not to Assert Defenses Against Assignee 9.404
Rights Acquired by Assignee 9.405
Modification of Assigned Contract 9.406
Discharge of Account Debtor 9.407
Restrictions on Creation or Enforcement of Security Interest in Leasehold Interest or in Lessor’s Residual Interest 9.408
Restrictions on Assignment of Promissory Notes, Health-care-insurance Receivables, and Certain General Intangibles Ineffective 9.409
Restrictions on Assignment of Letter-of-credit Rights Ineffective 9.501
Filing Office 9.502
Contents of Financing Statement 9.503
Name of Debtor and Secured Party 9.504
Indication of Collateral 9.505
Filing and Compliance with Other Statutes and Treaties for Consignments, Leases, Other Bailments, and Other Transactions 9.506
Effect of Errors or Omissions 9.507
Effect of Certain Events on Effectiveness of Financing Statement 9.508
Effectiveness of Financing Statement if New Debtor Becomes Bound by Security Agreement 9.509
Persons Entitled to File a Record 9.510
Effectiveness of Filed Record 9.511
Secured Party of Record 9.512
Amendment of Financing Statement 9.513
Termination Statement 9.514
Assignment of Powers of Secured Party of Record 9.515
Duration and Effectiveness of Financing Statement 9.516
What Constitutes Filing 9.517
Effect of Indexing Errors 9.518
Claim Concerning Inaccurate or Wrongfully Filed Record 9.519
Numbering, Maintaining, and Indexing Records 9.520
Acceptance and Refusal to Accept Record 9.522
Maintenance and Destruction of Records 9.523
Information from Filing Office 9.524
Delay by Filing Office 9.525
Fees 9.526
Filing-office Rules 9.527
Duty to Report 9.601
Rights After Default 9.602
Waiver and Variance of Rights and Duties 9.603
Agreement on Standards Concerning Rights and Duties 9.604
Procedure if Security Agreement Covers Real Property or Fixtures 9.605
Unknown Debtor or Secondary Obligor 9.606
Time of Default for Agricultural Lien 9.607
Collection and Enforcement by Secured Party 9.608
Application of Proceeds of Collection or Enforcement 9.609
Secured Party’s Right to Take Possession After Default 9.610
Disposition of Collateral After Default 9.611
Notification Before Disposition of Collateral 9.612
Timeliness of Notification Before Disposition of Collateral 9.613
Contents and Form of Notification Before Disposition of Collateral: General 9.614
Contents and Form of Notification Before Disposition of Collateral: Consumer-goods Transaction 9.615
Application of Proceeds of Disposition 9.616
Explanation of Calculation of Surplus or Deficiency 9.617
Rights of Transferee of Collateral 9.618
Rights and Duties of Certain Secondary Obligors 9.619
Transfer of Record or Legal Title 9.620
Acceptance of Collateral in Full or Partial Satisfaction of Obligation 9.621
Notification of Proposal to Accept Collateral 9.622
Effect of Acceptance of Collateral 9.623
Right to Redeem Collateral 9.624
Waiver 9.625
Remedies for Secured Party’s Failure to Comply with Chapter 9.626
Action in Which Deficiency or Surplus Is in Issue 9.627
Determination of Whether Conduct Was Commercially Reasonable 9.628
Nonliability and Limitation on Liability of Secured Party 9.701
Effective Date of Revisions 9.702
Saving Clause 9.703
Security Interest Perfected Before Effective Date 9.704
Security Interest Unperfected Before Effective Date 9.705
Effectiveness of Action Taken Before Effective Date 9.706
When Initial Financing Statement Suffices to Continue Effectiveness of Financing Statement 9.707
Amendment of Pre-effective-date Financing Statement 9.708
Persons Entitled to File Initial Financing Statement or Continuation Statement 9.709
Priority 9.801
Effective Date of Amendments 9.802
Saving Clause 9.803
Security Interest Perfected Before Effective Date 9.804
Security Interest Unperfected Before Effective Date 9.805
Effectiveness of Action Taken Before Effective Date 9.806
When Initial Financing Statement Suffices to Continue Effectiveness of Financing Statement 9.807
Amendment of Pre-effective-date Financing Statement 9.808
Person Entitled to File Initial Financing Statement or Continuation Statement 9.809
Priority 9.1071
Control of Virtual Currency 9.5185
Fraudulent Filing 9.5211
Uniform Form of Written Financing Statement and Amendment
Green check means up to date. Up to date

Accessed:
Jun. 5, 2024

§ 9.407’s source at texas​.gov